This is an amalgam of known demand, forecasts and product to
be made for finished stock. The phasing of the demand may reflect the
availability of the plant to respond. The remainder of the schedule is derived
from the MPS. Two key considerations in setting up the MPS are the size of
`time buckets' and the `planning horizons'. A `time bucket' is the unit of time
on which the schedule is constructed and is typically daily or weekly. The
`planning horizon' is how far to plan forward, and is determined by how far
ahead demand is known and by the lead times through the operation. There are
three distinct steps in preparing an MPS:
Explosion uses the Bill of Materials
(BOM). This lists how many, of what components, are needed for each item (part,
sub assembly, final assembly, finished product) of manufacture. Thus a car
requires five wheels including the spare. BOM's are characterized by the number
of levels involved, following the structure of assemblies and sub assemblies.
The first level is represented by the MPS and is 'exploded' down to final
assembly. Thus a given number of finished products is exploded to see how many
items are required at the final assembly stage.
The next step is 'netting', in which
any stock on hand is subtracted from the gross requirement determined through
explosion, giving the quantity of each item needed to manufacture the required
The final step is 'offsetting'. This
determines when manufacturing should start so that the finished items are
available when required. To do so a 'lead time' has to be assumed for the
operation. This is the anticipated time for manufacturing.
The whole process is repeated for the next level
in the BOM and so on until the bottom is reached. These will give the
requirements and timings to outside suppliers.